The campaign group Global Witness has calculated the OPL 245 deal in 2011 deprived Nigeria of double its annual education and healthcare budget.
Eni and Shell are accused of knowing the money they paid to Nigeria would be used for bribes.
The Italian and Anglo-Dutch energy giants deny any wrongdoing.
This unfolding scandal, which is being played out in an Italian court, has involved former MI6 officers, the FBI, a former President of Nigeria, as well as current and former senior executives at the two oil companies.
The former Nigerian oil minister, Dan Etete, was found guilty by a court in France of money laundering and it emerged he used illicit funds to buy a speed boat and a chateau. It is also claimed he had so much cash in $100 bills that it weighed five tonnes.
Shell is one of the oil firms facing corruption charges
Global Witness has spent years investigating the deal which gave Shell and Eni the rights to explore OPL 245, an offshore oil field in the Niger Delta.
It has commissioned new analysis of the way the contract was altered in favour of the energy companies and concluded Nigeria's losses over the lifetime of the project could amount to $5.86bn, compared to terms in place before 2011.
Oil giants face Nigeria 'corruption' trial
New evidence in Shell corruption probe
The analysis was carried out by Resources for Development Consulting on behalf of Global Witness, as well as the NGOs HEDA, RE:Common and The Corner. The estimated losses were calculated using an oil price of $70 a barrel as a basis.
Eni has criticised the way it was calculated because it ignores the possibility that Nigeria had the right to revise the deal to claim a 50% share of the production revenues.
Deal or no deal
Campaigners say the deal should be cancelled.
"We discovered that Shell had constructed a deal that cut Nigeria out of their share of profit oil from the block," Ava Lee, a campaigner at Global Witness told the BBC's World Business Report.
"This amount of money would be enough to educate six million teachers in Nigeria. It really can't be underestimated just how big a deal this could be for a country that right now has the highest rates of extreme poverty in the world."
Nigeria is the richest economy in Africa, but despite having large resources of oil and gas millions of people are poor.
It is understandable why Eni and Shell wanted to acquire the rights to develop OPL 245, because it is estimated to contain nine billion barrels of oil.
But the process of how they secured the contract is dogged by claims of corruption.
The court in Milan is weighing evidence of how a former Nigerian oil minister, Dan Etete, awarded ownership of OPL 245 to Malabu, a company he secretly controlled.
He is accused of paying bribes to others in the government, such as former President Goodluck Jonathan, to ensure that process went smoothly.
Shell and Eni are accused of knowing the $1.1bn they paid to Nigeria would be used for bribes, claims based on the content of emails which have since emerged.
"Looking at the emails it seems that Shell knew that the deal they were constructing was misleading but they went ahead with it anyway even though a number of Nigerian officials raised concerns about this scandalous, scandalous deal," says Ava Lee from Global Witness.
The Anglo-Dutch and Italian energy giants insist they have done nothing wrong, because they paid the money to secure the exploration rights directly to the Nigerian government.
Shell issued a statement to BBC World Business Report saying: "Since this matter is before the Tribunal of Milan it would not be appropriate for us to comment in detail. Issues that are under consideration as part of a trial process should be adjudicated in court and we do not wish to interfere with this process.
"We maintain that the settlement was a fully legal transaction and we believe the trial judges in Italy will conclude that there is no case against Shell or its former employees."
Eni has also denied any wrongdoing and told the BBC that it questions the competence of the experts commissioned by Global Witness and its "partners", as well as raising the possibility that the report by the campaign group is defamatory.
Shell accused of abuses in Nigeria
The Italian oil and gas company said "as this matter is currently before the Tribunal of Milan, we are unable to comment in detail".
In a statement it noted: "Global Witness together with its partners Corner House, HEDA Resource Centre and Re: Common had requested twice to be admitted as aggrieved parties in the Milan proceedings. On both occasions, the request was firmly denied by the Tribunal of Milan."
Eni also said it "continues to reject any allegation of impropriety or irregularity in connection with this transaction".
Biggest ever corruption case
Campaigners believe this is a landmark case and the outcome of the trial in Milan will cause an earthquake to reverberate through the oil and gas industry.
Nigeria's leader is being encouraged to intervene by Olanrewaju Suraju, from HEDA. "President Buhari should reject any deal," he said.
The contrast between the way Italy deals with migrants and the actions of one of the nation's biggest companies has been raised by Antonio Tricarico of Re;Common.
"The Italian government is discouraging Nigerian migrants trying to reach Italy by claiming that it will help them at home, but Italy's biggest multi-national, part owned by the state, is accused of scamming billions from the Nigerian people."
The outcome of the unprecedented court case in Milan could force the oil industry to change how it conducts its business, especially in countries where corruption is rife, because more transparency about contracts and payments made would discourage fraud.
The Central Bank of Nigeria (CBN) Wednesday injected $210 million into the foreign exchange market to help stabilize the naira.
Figures from the bank showed that it offered $100m to the wholesale segment, while the Small and Medium Enterprises segment received $55m.
The invisibles segment, comprising tuition fees, medical payments and basic travel allowance, among others, also received a $55m boost.
The Director, Corporate Communications, CBN, Mr Isaac Okorafor, who confirmed the figures, noted that the CBN was pleased with the state of the forex market, adding that the bank would continue to intervene in order to sustain the liquidity in the market and guarantee the international value of the naira.
According to Okorafor, the level of transparency in the market was also a boost to confidence in the market.
Consequently, the naira maintain its stability in the forex market, exchanging at an average of N361/$1 in the BDC segment of the market on Wednesday.
Nigeria has started exporting cassava chips to parts of Europe, specifically, Germany through the Pacific Ring West Africa (PRWA) company.
The Executive Secretary, Nigerian Export Promotion Council, NEPC, Segun Awolowo flagged off the exportation of the product in Abuja.
Awolowo, who spoke to journalists after sealing the container to be exported at the Idu Industrial Layout in Abuja, praised the product, saying it is very nice and testy.
“I am proud of this backward integration, we have our cassava now being very useful and this is also helping our farmers as it is providing jobs. So we are not just exporting raw timbers cassava anymore, we are actually doing something with the cassava.
“You can see the packaging, standards are met, the factory is clean and everything is being done precisely. I am so happy to flag off this first container going to Germany.
“I hope we are able to scale up with the company and export more,” adding that the council has been encouraging small and medium enterprises to boost their productivity for foreign markets.
“We work with small and medium scale industry, scale them up for export, advice and also get a market for them out there” Awolowo said.
Speaking at the occasion, the Chief Executive Officer, PRWA, Thomas Hirsch, said that the export container marked the first time that 100 per cent Nigerian grown, processed and packaged cassava chips have been exported from Nigeria to Europe.
According to him, the move has “countered the trend of exporting raw materials with little value added and importing branded snacks.”
Hirsch said further: “Value added products like cassavanovas will contribute to Nigeria’s economy, job creation, and this entrance into European markets represents a transformative moment in global perceptive of the quality, taste and international appeal of Nigeria’s products.
“PRWA have conducted consumer test around the world, with British, American, European and Asian consumers agreeing that they want to see Cassavanos in every shop across the globe.”
The Nigerian Stock Exchange market indices further dropped on Thursday to 31,864 points over renewed pressure to sell by investors.
The All-Share Index on dipped by 244.12 points or 0.76 percent to close at 31,864.80 compared to 32,108.92 points on Wednesday.
The market capitalization also suffered a setback by shedding N89 billion or 0.76 percent to close at N11.633 trillion as against the N11.722 trillion on Wednesday.
Thursday’s price movement indicated that International Breweries led the losers’ table by shedding N3.35
to close at N30.20 per share.
Guaranty Trust Bank followed with a loss of N2.40 to close at N34, while Mobil Oil dropped N1 to close at N150 per share. Zenith Bank lost 75k to close at N23.30, just as UACN share went down by 50k to close at N9.50 per share.
On the gainers table, Nestle led gaining N50 to close at N1, 500 per share while Nigerian Breweries followed with a gain of 50k to close at N83.
The Cement Company of Northern Nigeria added 50k to close at N18.50 per share, Union Bank gained 20k to close at N5.05, while Eco Bank Transnational Incorporated advanced by 5k to close at N15.75 per share.
Despite the drop in market indices, the volume of shares traded rose by 52.34 percent as investors staked N2.45 billion on 349.25 million shares
transacted in 2,595 deals.
This was in contrast with a turnover of 229.26 million shares valued at N2.49 billion achieved in 2,726 deals on
Diamond Bank topped as the most active stock, exchanging 208.68 million shares worth N185.36 million while FCMB Group followed with an account of 34.68 million shares valued at N53.83 million. Stanbic IBTC exchanged 15.09 million shares worth N724.72 million.
The U.S. Department of Agriculture (USDA) has projected that Nigeria will become the world’s biggest rice importer after China.
According to the USDA, Nigeria’s importation of rice will jump up by a whopping 13 percent to 3.4 million metric tons.
The Rice Outlook report released on Tuesday, said: “China and Nigeria are projected to remain the largest rice importing countries in 2019, followed by the EU, Cote d’Ivoire, and Iran.”
The USDA also said that “Nigeria and Egypt are projected to account for the bulk of the 2019 import increase.”
This latest USDA rice outlook projection for Nigeria is however contrary to the optimism by the Federsl Government o become rice self-dependent in the nearest future.
It will be recalled that Vice President, Yemi Osinbajo had said earlier in the year that Nigeria will stop importing rice into the country within the next one year on account of Federal government’s interventions in rice production.
“We only import 2 percent of rice into the country presently and this is because we are funding agriculture and production of rice locally.
“Today, only two per cent of rice consumed here are imported while the remaining 98 per cent are locally produced, since we came to power, we have been funding agriculture and encouraging our farmers across the country so as to be self-sufficient in food production”, the VP had said.
According to data from Bloomberg terminal, rice production in Nigeria had increased more than 50 percent since 2012 to 3.7 million tons last year.
Domestic demand rose 4 percent to 6.7 million tons in the 2017-18 year that ended in May, leaving gap of 3 million tons.
The Federal Government of Nigeria on Wednesday successfully raised
a new $2.86 billion Eurobond.
The $2.86 billion however came at a higher interest rate, a move that may put more pressure on the country’s debt servicing to revenue ratios.
Analysts are of the belief that the new interest rates may drive rates paid on debts to about 70% of the revenue ratio except government is able to boost its revenue generation.
Nigeria at the moment spends an average of N69 of every N100 revenue servicing debts.
The completion of the Eurobond transaction is coming after Nigeria’s successful engagement with the Fitch rating agency, and their subsequent decision to change the outlook on the country’s sovereign rating from B+ (negative) to B+ (stable), based on improving macro-economic fundamentals.
The new $2.86 borrowing has however pushed Nigeria’s external debt to
$24.9 billion, which is six percent of the country’s Gross Domestic Product.
In the new borrowing, the Federal government sold benchmark-sized dollar bonds maturing in 2025, 2031 and 2049, which is equivalent to a 7-year, 12-year and 30-year bonds, at a price higher than its previous issuance.
It sold January 2049 (the 30-year bonds) at 9.25 percent compared to the 7.625 percent yield achieved on a 30-year bond a year ago.
The federal government also raised a 12-year bond at 8.75 percent
compared with the 7.875 percent achieved on a similar tenor in February and sold the 7-year bond at 7.625 percent.
The proceeds of new borrowing is expected to be used to fund the country’s N9.1 trillion ($29.8 billion) budget, which has a deficit of N2.4 trillion.
The deficit figure may however increased if government’s
ambitious revenue targets set out in the budget are not achieved.
Speaking on the successful completion of transaction, the Minister of Finance, Zainab Ahmed, said: “Nigeria is investing strategically in critical capital projects to bridge our infrastructure deficit, provide a better operating environment for the private sector, and improve the standard of living of our citizens. The proceeds of this issuance will provide critical financing for projects in transportation, power, agriculture, housing, healthcare and education as well as the capital elements of our social investment programmes. Nigeria’s Economic Recovery and Growth plan is delivering results.”
In its latest round of intervention, the Central Bank of Nigeria (CBN) on Tuesday injected the sum of $210 million in the inter-bank foreign exchange market.
Figures obtained from the CBN indicate that the authorised dealers in the wholesale segment of the market received the sum of $100 million while the Small and Medium Enterprises (SMEs) and invisibles segments were allotted the sum of $55 million each.
The Bank’s Director, Corporate Communications Department, Mr. Isaac Okorafor, assured that the CBN would continue to sustain liquidity in the forex market. He also expressed optimism that the Naira will continue its strong run against the dollar and other major currencies around the world, considering the stability in the market and robust reserves.
CBN had on Friday, November 2, 2018, made interventions to the tune of $337.16million in the retail Secondary Market Intervention Sales (SMIS) and CNY 56.17million in the spot and short-tenored forwards segment of the foreign exchange market.
Meanwhile, the Naira yesterday exchanged at an average of N360/$1 in the BDC segment of the market.
Two commercial banks in the Nigeria, Diamond Bank Plc and Access Bank Plc have denied reports that the two banks are in merger or acquisition talks.
The banks, in seperate statements on Monday, notified the Nigerian Stock Exchange and the general public that the report circulating in some media is false.
According to Company Secretary of Diamond Bank, Mr Uzoma Uja, the bank was not in discussion with any financial institution at the moment on any form of merger or acquisition.
Uja, who, in the statement noted the attention of Diamond Bank had been drawn to the rumour in the media stating that the bank was purportedly in discussion with Access Bank to acquire the bank said: “We wish to state categorically that the bank is not in discussion with any financial institution at the moment on any form of merger or acquisition.
“We trust that the above clarifies the position of the bank with regards to the rumour on the various media platforms,” Uja said.
The Company Secretary of Access Bank, Mr Sunday Ekwuochi, in his own statement, said the bank had not entered into any such discussion with Diamond Bank or any other institution.
“As a publicly quoted company built on best practice, the bank is fully cognisant of its disclosure obligations in respect of any such corporate action and will always discharge its obligations in the most professional manner.
“Consequently, any statement regarding any such corporate action that is not issued by the bank should be disregarded,” Ekwuochi said.
The Central Bank of Nigeria (CBN) has said Nigeria is leading other Africa nations and one of the top five (5) globally in remittances inflows.
CBN Governor, Godwin Emefiele, who made this known, however, did not mention the exact amount of inflow but simply said Nigerians in the diaspora and other African nationals sent $72 billion home last year.
Emefiele, who was represented at a workshop on Remittance Household Surveys by the Director, Statistics Department of the apex bank, Mohammed Tumala, on Tuesday in Abuja, also said, while quoting a World Bank report that Nigeria was one of the top five countries of the world which received about $613 billion in remittances in 2017.
Although, the World Bank had in the same report disclosed that Nigeria received a total of N22 billion remittances inflows in 2017.
In his address, the CBN boss said remittances inflows contribute substantially to foreign exchange earnings and household finances in most developing countries.
“Money sent home by migrant workers is among the major financial inflows to developing countries and in some cases, it exceeds international aids and grants.
“According to the World Bank, global remittances have risen gradually over the years to about $613 billion in 2017, of which $72 billion was received by African countries. As a recipient country, Nigeria tops African countries and is also ranked among the top five globally,” he said.
Emefiele added that Nigeria had taken steps to attract more remittances inflow into the nation to further develop the Nigerian economy.
The steps aimed at attracting Nigerians in diaspora to remit funds home, Emefiele said, include the floating of a $300 million diaspora bond by the federal government.
He also added that the introduction of electronic Certificate of Capital Importation to Nigerians abroad and the country’s membership of the International Association of Money Transfer Networks were parts of measures to encourage Nigerians outside the country to remit monies home.
Emefiele said the former statistics on remittances inflows in the country were based on bank records and staff estimates, which according to him is a “methodology with limitations.”
“We think that a large chunk of migrants’ remittances pass through informal channels and are thus, unrecorded.
“Nigeria is yet to conduct a household based remittances survey to provide scientific estimates of these informal inflows.
“In addition, data from banking records also come with some discrepancies due to classification challenges on the part of reporting,” he added.